🇨🇦#Today's Canadian employment report may define the CAD trend
#The Canadian dollar (CAD) gained 0.06% on Thursday as the price of crude oil, Canada's major export item, surged by more than 3% on the Israel ceasefire rejection.
#Possible effects for traders
USDCAD has been in an uptrend since the end of 2023, when the market started to scale back on its expectations for an early rate cut by the Federal Reserve (Fed). At the same time, the market doesn't expect the Bank of Canada #(BOC) to be particularly dovish, either. Fundamentally, the divergence between U.S. and Canadian monetary policies favours the Canadian dollar. That is because investors expect more interest rate cuts from the Fed than from the BOC. According to the interest rate swap market data, traders currently price in more than 115 basis points (bps) worth of rate cuts by the Fed and just under 80 bps of cuts by the BOC in 2024. Indeed, the protocols from the recent BOC meeting confirmed that policymakers were concerned about cutting borrowing costs too soon amid persistent inflation.
#USDCAD was essentially unchanged during the Asian and early European trading sessions. Today, the main event for CAD traders is the release of the monthly employment statistics at 1:30 p.m. UTC. The data release usually affects the market significantly. The report includes the latest nonfarm employment figures and unemployment rate—one of the key metrics the regulator uses to decide on changes in monetary policy. #If employment rises faster than expected and the unemployment rate drops, the short-term bearish trend in USDCAD may continue, bringing the pair down towards the critical 1.34000 level. Worse-than-expected results may lead to a sharp upward correction in USDCAD, possibly taking the pair above the important 1.35000 level.
#The Canadian dollar (CAD) gained 0.06% on Thursday as the price of crude oil, Canada's major export item, surged by more than 3% on the Israel ceasefire rejection.
#Possible effects for traders
USDCAD has been in an uptrend since the end of 2023, when the market started to scale back on its expectations for an early rate cut by the Federal Reserve (Fed). At the same time, the market doesn't expect the Bank of Canada #(BOC) to be particularly dovish, either. Fundamentally, the divergence between U.S. and Canadian monetary policies favours the Canadian dollar. That is because investors expect more interest rate cuts from the Fed than from the BOC. According to the interest rate swap market data, traders currently price in more than 115 basis points (bps) worth of rate cuts by the Fed and just under 80 bps of cuts by the BOC in 2024. Indeed, the protocols from the recent BOC meeting confirmed that policymakers were concerned about cutting borrowing costs too soon amid persistent inflation.
#USDCAD was essentially unchanged during the Asian and early European trading sessions. Today, the main event for CAD traders is the release of the monthly employment statistics at 1:30 p.m. UTC. The data release usually affects the market significantly. The report includes the latest nonfarm employment figures and unemployment rate—one of the key metrics the regulator uses to decide on changes in monetary policy. #If employment rises faster than expected and the unemployment rate drops, the short-term bearish trend in USDCAD may continue, bringing the pair down towards the critical 1.34000 level. Worse-than-expected results may lead to a sharp upward correction in USDCAD, possibly taking the pair above the important 1.35000 level.
#USDCAD reversed from resistance level 1.3530
Likely to fall to support level 1.3400
USDCAD currency pair recently reversed down from the key resistance level 1.3530 (which has been reversing the price from the middle of January), intersecting with the upper daily Bollinger Band and the 50% Fibonacci correction of the downward ABC correction (2) from the start of November.
The downward reversal from the resistance level 1.3530 stopped the previous impulse waves 3 and (3).
Given the strength of the resistance level 1.3530, USDCAD currency pair can be expected to fall further to the next support level 1.3400.
Likely to fall to support level 1.3400
USDCAD currency pair recently reversed down from the key resistance level 1.3530 (which has been reversing the price from the middle of January), intersecting with the upper daily Bollinger Band and the 50% Fibonacci correction of the downward ABC correction (2) from the start of November.
The downward reversal from the resistance level 1.3530 stopped the previous impulse waves 3 and (3).
Given the strength of the resistance level 1.3530, USDCAD currency pair can be expected to fall further to the next support level 1.3400.
🇨🇦 Volatility in USDCAD will rise today due to important reports releases
The Canadian dollar (CAD) lost 0.36% on Wednesday, as Brent and WTI oil prices dropped after the U.S. reported a larger-than-expected increase in crude oil stocks.
#Possible effects for traders
USDCAD has been trading in a clear bullish trend since the beginning of 2024, as investors pushed back their expectations of imminent rate cuts by the Federal Reserve (Fed). At the same time, traders expect the Bank of Canada (BOC) to start cutting interest rates earlier than the Fed, pricing in a 40% probability of a 25-basis-point rate cut in April, while expecting the Fed to lower rates no earlier than June. This divergence in traders' expectations is exerting upward pressure on USDCAD. However, the strong resistance the pair is facing at 1.36000 may be impossible to break without a solid fundamental impulse. This impulse may occur today as both countries will release important macroeconomic reports.
#USDCAD was declining slightly during the Asian and early European trading sessions. Today, traders should focus on 2 critical reports at 1:30 p.m. UTC. First, Statistics Canada will publish the Gross Domestic Product (GDP) report, and the U.S. will release the Personal Consumption Expenditure (PCE) Price Index. The U.S. data tends to have a more sizeable impact on the market, and it may balance out any effect from the Canadian data. Overall, volatility in USDCAD could be quite substantial. The most bullish impact on USDCAD will be in case of weaker-than-expected Canadian GDP and higher-than-expected U.S. PCE data. Thus, USDCAD may move towards 1.36500. Conversely, strong Canadian GDP figures and lower U.S. inflation numbers will put substantial bearish pressure on the pair, and the mid-term bullish trend in USDCAD may reverse.
The Canadian dollar (CAD) lost 0.36% on Wednesday, as Brent and WTI oil prices dropped after the U.S. reported a larger-than-expected increase in crude oil stocks.
#Possible effects for traders
USDCAD has been trading in a clear bullish trend since the beginning of 2024, as investors pushed back their expectations of imminent rate cuts by the Federal Reserve (Fed). At the same time, traders expect the Bank of Canada (BOC) to start cutting interest rates earlier than the Fed, pricing in a 40% probability of a 25-basis-point rate cut in April, while expecting the Fed to lower rates no earlier than June. This divergence in traders' expectations is exerting upward pressure on USDCAD. However, the strong resistance the pair is facing at 1.36000 may be impossible to break without a solid fundamental impulse. This impulse may occur today as both countries will release important macroeconomic reports.
#USDCAD was declining slightly during the Asian and early European trading sessions. Today, traders should focus on 2 critical reports at 1:30 p.m. UTC. First, Statistics Canada will publish the Gross Domestic Product (GDP) report, and the U.S. will release the Personal Consumption Expenditure (PCE) Price Index. The U.S. data tends to have a more sizeable impact on the market, and it may balance out any effect from the Canadian data. Overall, volatility in USDCAD could be quite substantial. The most bullish impact on USDCAD will be in case of weaker-than-expected Canadian GDP and higher-than-expected U.S. PCE data. Thus, USDCAD may move towards 1.36500. Conversely, strong Canadian GDP figures and lower U.S. inflation numbers will put substantial bearish pressure on the pair, and the mid-term bullish trend in USDCAD may reverse.